I. Technical Field
The present invention generally relates to the field of data processing and, more particularly, to tax related data processing systems and methods.
II. Background Information
The proper calculation of sales taxes, use taxes, and other transaction-based taxes (collectively “transaction taxes” or simply “taxes”) is not a trivial task. A single transaction can be taxed by several different government authorities. For the purposes of transaction taxes, there are currently over 7,600 jurisdictions (“tax authorities”) in the United States. Multiple jurisdictions can simultaneously exert taxing authority on the same transaction. For example, a single transaction in New York City can result in state, county, city, and local (e.g. zone) taxes. However, different jurisdictions classify transactions differently, resulting in a wide variety of different tax exemptions. For example, an orange can be classified as a taxable fruit in one jurisdiction, while considered a non-taxable beverage in another jurisdiction. Each jurisdiction can have distinctly different exemption rules, tax rates, and maximum tax rates.
Remote transactions (transactions where the buyer and seller are not at the same location) can further complicate the accurate calculation of transaction taxes. Common examples of remote transactions can include transactions that occur via telephone, mail order, the Internet, or some other communication mechanism by which the parties involved in the transaction are located in different jurisdictions. If a merchant has a “nexus” in a particular jurisdiction, that merchant is obligated to collect sales tax on any transactions in the jurisdiction. If no such nexus exists, use taxes are typically incurred by the buyer. Use tax obligations are credited by the amount of sales tax that is paid, but given the variety of different tax rates, the collection of sales tax does not preclude a use tax obligation for the same transaction. In summary, the calculation of transaction taxes can be very complex.
U.S. Published Patent Application No. 2003/0144931 shows a system for calculating transaction-based taxes, such as use tax, sales tax, and other transaction-based taxes. The tax calculator can generate tax calculations using a wide variety of different combinations of one or more transaction characteristics and one or more non-transaction characteristics. A transaction subsystem can be configured to capture a transaction characteristic from an online shopping cart. A subscription subsystem can be used to capture a nexus characteristic that can applied to multiple different tax calculations performed on behalf of a particular merchant by a tax calculator. In some embodiments, different interfaces can be configured to receive different types of data. A transaction interface can be configured to receive transaction characteristics and a merchant interface can be configured to receive non-transaction characteristics which can potentially apply to more than one transaction.
U.S. Pat. No. 6,064,983 discloses a tax server for modelling the tax interpretation of various insurance and annuity products. The system utilizes a plurality of front-end converters to convert data sent by different user applications into a format required by a back-end tax engine. Unfortunately, this disclosure requires the system to have a unique converter for each different user application, and the converted data is converted to a single message structure for a specific tax engine. Thus, before a business can use the system, a converter must be created to accept data from the business. Moreover, the system does not provide add-on capabilities for additional user-based tax functions not provided by the tax engine.
U.S. Published Patent Application No. 2005/0055279 shows a method for processing tax calculation requests. The method comprises submitting a tax calculation request to a tax engine in an industry standard format; identifying and resolving customer-specific extensions in the request; selecting one of a plurality of tax calculators to handle the request; translating the request from the industry standard format to a calculator-specific format for the selected tax calculator; and using the selected tax calculator to process the request in the calculator-specific format.